“Abenomics has been good so far, and I would give almost
full marks to his monetary and fiscal policies,” Yoshihiko Miyauchi, who heads the Japanese financial services firm, said
in an interview on June 24. Still, “a failure in releasing the
third arrow could turn Japan’s honeymoon into divorce.”

Under Abe, Japan is rolling out unprecedented monetary
easing and spending $105 billion to reverse more than 10 years
of deflationary malaise, measures that weakened the yen and made
Japan the best-performing major stock market this year. The
economic revival hinges on the deregulation of labor, medical
services, education and agriculture, said Miyauchi.

The prime minister said this month that autumn would be the
soonest his government presents a legislative growth strategy to
accompany monetary and fiscal stimulus -- the first two arrows
of his policies dubbed Abenomics.

Japan’s Nikkei 225 Stock Average (NKY) has gained 23 percent this
year, even after slumping since late May. Shares of Orix, which
offers services ranging from leasing and insurance to real
estate and private equity, have jumped 22 percent. The stock
closed 0.2 percent lower at 1,180 yen today, and the Nikkei 225
declined 1 percent to 12,834.

“If the Nikkei ends this year between 17,000 and 18,000,
it’s a sign that Abenomics is successful,” said Miyauchi, 77,
who headed governmental advisory panels on regulatory reform
from 1996 to 2006.

Deregulation Targets

Abe on June 5 vowed to deregulate the energy, health and
infrastructure industries and double foreign investment to 35
trillion yen ($357 billion) by 2020.

He also plans to boost power industry investment to 30
trillion yen within a decade and triple the use of public-private partnerships to 12 trillion yen to fund infrastructure
projects such as airports, waterworks and highways. He didn’t
address changing labor laws making it easier for companies to
eliminate jobs.

“I want the government to hammer out policies that can get
rid of obstacles for businesses and energize the private sector,
not just provide them with subsidies,” Miyauchi said.

Takeover Targets

Miyauchi will continue to seek acquisition targets, with as
much as 150 billion yen to spend on assets, he said. He struck
an agreement in February to buy Dutch bank Rabobank Groep’s
Robeco Groep NV asset-management unit for 1.94 billion euros
($2.5 billion). Orix has also announced investments this year in
financial firms in Saudi Arabia and Mongolia.

“We have no specific takeover target at the moment,”
Miyauchi said, adding that he’s interested in Asia and the
Middle East. “If nothing pops up, we may consider returns to
shareholders.”

Shareholders’ equity at Orix rose 19 percent last fiscal
year to 1.64 trillion yen as of March 31 after the Tokyo-based
company converted bonds into stock, according to an earnings
presentation posted on its website.

Orix in the past year announced acquisitions worldwide
valued at more than $3 billion, up from about $460 million a
year earlier, according to data compiled by Bloomberg.